OIG Blog Entries from January 2014

Could the U.S. Postal Service help the nearly 70 million Americans who are cut off in some way from the mainstream financial system? We’re talking about people who, because they lack ready or full access to normal banking services, paid $89 billion in fees and interest to alternative financial service outlets such as payday lenders and check cashers in 2012 alone. They are the financially underserved – also known as the underbanked or unbanked – and many of them are one unexpected expense away from bankruptcy or homelessness.

According to our recently released white paper, Providing Non-Bank Financial Services for the Underserved, not only can the Postal Service help the financially underserved, but it is also well-suited to the task. For starters, the Postal Service network extends to every community across the country. And while the Postal Service already offers money orders and international money transfers, the paper identifies a suite of additional services and products the Postal Service could develop, mainly through partnerships with banks:

Payment services

Reloadable prepaid cards

Options for mobile transactions

Access to small loans

By offering these kinds of services, the Postal Service could help bring financial stability to millions of Americans. It could also generate income: Even if only 10 percent of the money paid in interest and fees were instead spent on less-expensive Postal Service alternatives, the Postal Service would realize $8.9 billion in new revenue.

Moreover, when you consider that 59 percent of post offices are located in ZIP Codes that have only one bank or none at all, and that surveys repeatedly demonstrate the public’s unmatched trust in the Postal Service, developing non-bank financial services would not only meet a market need, but also fulfill a public purpose.

What do you think? What types of non-bank financial services could the Postal Service provide to help address the needs of the underserved?

It’s back to the future for the requirement that all letter and flat automation mailings be Full-Service Intelligent Mail barcode (IMb) compliant to obtain discounts. Mailers were expecting implementation this week of the Full-Service requirement, but the U.S. Postal Service pushed back the date until 2015 because the Postal Regulatory Commission ruled that the mandate constituted a price increase that would have busted the inflation-based price cap.

Many mailers welcomed the delay, as few felt the entire industry – the Postal Service included – was ready for full-service, which included the requirement that barcodes keep their unique sequence of numbers for at least 45 days before the barcode sequence is used again. A number of large mailers have been Full-Service IMb compliant for months and have taken advantage of the benefits of IMbs, including tracking of service performance, identifying bottlenecks, and coordinating follow-up marketing efforts. But many mid-sized and smaller mailers were not ready for the added requirements, which include electronic submission of postage statements and use of unique IMbs on trays and containers. And concerns were growing that the Postal Service’s systems are not yet capable of handling the expected increase in IMb data.

The Office of Inspector General raised similar concerns in a fall audit report. In particular, we found the Postal Service had fallen short in developing a comprehensive plan for the continued development and use of IMb data. Notably, the Postal Service’s plans around the use of IMb data have grown considerably since its original vision of the program and it has not taken into account the needs of all mailers. The Postal Service needs to upgrade its data storage capabilities and data systems to accommodate the growing use of IMbs and to support stakeholders’ needs.

The silver lining in this delay could be that it gives the Postal Service another year to develop a comprehensive IMb data plan that includes detailed input from all business users and identifies costs and milestones for the life of the IMb program. It also gives mailers more time to get ready, while letting those already in the Full-Service IMb program keep their modest discounts.

Share your thoughts on the Full-Service IMb and the delayed implementation date.

Do you think another year will make a difference in the readiness of mailers? Of the Postal Service’s systems?

What incentives would you like to see to encourage smaller mailers to make the conversion to Full-Service IMb?

If you are already Full-Service compliant, what value do you get from the program?

Add “upkeep of postal facilities” to the list of tasks that get increasingly difficult to do under a budget crunch. Yet, Americans are passionate about their post offices, so it seems maintenance should be a priority.

However, the U.S. Postal Service’s financial challenges have made it hard to maintain facilities. During fiscal years 2009-2012, the Postal Service experienced a $382 million decrease in its budget for facility repairs, alterations, and capital improvements, resulting in incomplete repairs or unmet capital improvements. Our recent audit report found about half of the incomplete repairs represent safety or security issues and potential future major repairs.

Future costs for these unfunded repairs could reach $1.4 billion. In addition, our work determined that some of these repairs were potential Occupational Safety and Health Administration violations.

The Postal Service operates 32,000 facilities throughout the country with 280 million square feet of space, and it includes post offices, mail processing facilities, and annexes. The Postal Service’s Facilities Department says employees and customers are not in danger, as it prioritizes repairs based on the safety and security of Postal Service property. Still, the Postal Service’s capital spending freeze initiated in 2009 has clearly had an impact on the ability to upgrade and repair facilities. The Postal Service spent 29 percent below the industry average on facility repairs in FY 2012. Lower priority repairs and improvements are less likely to occur, potentially leading to a longer-term cost.

Our audit found the Postal Service lacking in developing a strategy to complete all necessary repairs and it did not always accurately prioritize repairs. We recommended it develop a strategy, reallocate funds to complete repairs, and reconcile its prioritization list annually.

We welcome your thoughts.

How best can the Postal Service make the necessary repairs to its facilities while operating under budget constraints?

Will people be interested in buying or leasing Postal Service buildings that haven't been well maintained? Or could it affect the value of the properties?

Are there issues other than decreased funding that prevent the Postal Service from completing necessary repairs?

Pages

Recent Blog Comments

I mistook your new envelope for a Priority Mail envelope and my package came back. Who came up with the hair-brained idea to name Express Mail Priority mail? I'll bet you thousands of people are picking up the wrong envelopes. In my case,...

You have to write your congressman or senator and then hound them...or go through the media. Otherwise you will be told, " we don't investigate that" or "we don't have any authority over that" or "you can make a report, but it will immediately...

It took me calling the Consumer advocates office in Washington to FINALLY get a call back from my district office. I was thirty days in to my complaint process. I was sent to phone numbers that weren't answered and my messages were not...